My LIC agent gave me some information about which I’m quite confused. Here’s the situation:

In 2007 I had taken 2 LIC polices – a Money Back policy (New Bima Gold – T. No. 179) of 10 lacs and a Term policy (Amulya Jeevan – T. No. 177) of 25 lacs. I was 26 years old in 2007 and the annual premiums for these two policies were 36100 and 11625 respectively. For the MB policy I paid premiums quarterly and for the Term policy annually.

I have been paying my premiums regularly since then. But had been thinking of discontinuing this MB policy (courtesy: lot of insightful articles from JagoInvestor). So I stopped paying premiums for it in 2011, after having paid for 2 quarters in FY11-12. Now the policy document mentions an auto-cover facility ie., valid full death cover for 2 years after first unpaid premium when at least 2 full years’ premiums have been paid. After the auto cover period is over I thought of making the policy paid up.

Then last year September I found out that Amulya Jeevan policy premiums have been reduced and now it’s T. No. 190. So the annual premium for a 26 year old with Sum Assured of 25 lacs is now 7725. Which means I was paying 3900 more annually. Even considering my current age, for 25 lacs the premium would be 10350 now ie., 1275 less. But by then I’d already paid its premium for FY11-12. (Off course my agent never mentioned a word about this!)

So I have decided to get a new Amulya Jeevan policy of 50 lacs in FY12-13 and before the renewal date of my existing Term policy.

Now comes the LIC agent’s part:
About the MB policy, he’s been behind my back for six months now trying to convince me to continue with it!
And now when I told him of my plan to take a new Term policy, he says – since I have an existing policy for which I have not been paying premiums, I need to make an application to LIC explaining why I am unable to continue with the MB policy and only if they approve the same will the proposal for my new Term policy be accepted.
Can this be true? I’m having doubts.

In the application for the new Term policy I intend to mention about my these two policies anyway. So is there anything wrong with my aforementioned plan of action? Or is the agent misleading me?

Appreciate your inputs on this.

Thanks!

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4 replies on this article “Is the LIC agent correct?”

Dear Anirban Ghosh, Your agent is telling a lie. Reason is plain & simple – As you are not paying your prem. his commission against your policy as not coming to him at the same time, the surrender/paid up or lapse policies bring down the rankings of the agent in question to qualify for their various levels & awards. Please do not listen to him.

Although you did not mentioned but from your reply, I assume that you are comfortable with idea of paying higher prem,. to LIC for the term covers be it old one or new one (to be purchased). Nothing wrong in that, it’s your choice. To purchase the same, just contact any other agent or visit local LIC office & you ‘ll get door step service for the same from the new agent assigned to you.

My 2 cents. Even if LIC has some archaic rules like that, you can always go in for some private players for term insurance. Remember that LIC has higher premiums compared to private players and also just because LIC pays a high percentage of claims doesn’t mean it’s the best

Yes agent is misleading you. Its better to call LIC office directly or better spare some time and go to local office and get it clarified. And then write your story here for others benefit also. Thanks.